Market Round Up: A Tale of Two Markets 🔀  A Tale of Two Cities 🏬

by | 5 Oct, 2018

 

1. A tale of two markets

U.S. Treasury bonds’ recent sell-off has pushed volatility to its highest level since the summer as investors dispose of bonds due to strong signs from the Federal Reserve that interest rates will most likely rise further. That volatility may portend another leg-up in yields which reached a peak on Thursday. But, as U.S. bonds are often seen as a risk-free investment, the higher yields have sent other investors towards the bond market and away from equities. Confused? So are the experts.

The bond yield hikes this week came on the back of strong economic data and the Fed’s third interest rate rise in the year. While higher rates were generally anticipated by the markets, the pace of the rise took many of them by surprise, triggering a selloff in the stock market. “We view this move as a reaction to an economy that is in very good shape; an economy that should be supportive of equities,” said John Bredemus, head of capital markets for Allianz Investment Management. And yet it all seems topsy turvy. This is actually meat and pudding for market traders. Price swings mean more opportunities to profit.

However, the more cautious out there fear that all the strong economic data emanating from America could accelerate inflation – which is bad news for everyone, but especially for retail related stocks as consumers are more likely to dither from shopping on the high street.

Related: Market Round Up: US Record Bull Run & Aramco Float Founders

 

2. A tale of two cities

Love it or hate it, Marmite maker Unilever has abandoned its plans to migrate its headquarters from London to Rotterdam.

Big investors (funds) said the move would have forced UK shareholders to sell their shares as they are mandated to only invest in FTSE 100 listed companies – the London Stock Exchange had confirmed a flight to Holland would have meant a delisting from the major index. Unilever said it recognised the proposal had not received the support from a significant group of shareholders and therefore has dropped the plan.

Unilever chairman Marijn Dekkers said they would to find ways to simplify the Anglo-Dutch structure as it was in the firm’s best interests. Unilever’s current dual-headed structure has existed since 1930, when Dutch margarine maker Unie merged with British soap maker Lever Brothers.

The brand powerhouse and maker of such delicacies as Pot Noodles, Ben & Jerry’s ice cream, Knorr, Lipton teas, Klondike ice cream sandwiches and Chicken Tonight will now keep its listing on the London Stock Exchange.

Related: What is the FTSE100 and why is it important for the U.K. economy?

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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